BENTONVILLE, Ark. — Walmart continues to ratchet up the pressure on chain drug pharmacies by rolling out small-format stores.
This fiscal year, the discount store giant plans to add 95 to 115 small-format units, which are less than 60,000 square feet and include its Walmart Neighborhood Market, Walmart Express and Walmart on Campus stores. The company premiered 76 in the fiscal year ended January 31.
 |
Pharmacy is a core component of the Walmart Neighborhood Market stores. |
Walmart is enthused about smaller outlets “because they compete really well against multiple channels,” Walmart U.S. president and chief executive officer Bill Simon said this year at the Raymond James Annual Institutional Investors Conference. He described Neighborhood Markets and Express stores as hybrids that compete against drug, grocery and dollar stores through pharmacies, fresh food and low prices.
The smaller stores, Simon said, have posted prescription and over-the-counter drug same-store sales gains, with pharmacy growth driven by the chain’s generic drug offer of $4 for 30 days.
Traffic at Neighborhood Markets, he noted, has been up 2% every quarter, with strength in every category. The company has about 260 Neighborhood Markets currently and expects to have 500 by late January 2015.
Same-store sales gains for Express have been in the double digits, with a substantial contribution from pharmacy, Simon noted. “If you can deliver … access to low-price prescriptions to markets that haven’t had access to them before, it’s very, very compelling from a traffic and a customer perspective,” he remarked.
In the spring, the retailer unveiled the country’s second Walmart on Campus outlet, at Arizona State University in Tempe. The first Walmart on Campus opened at the University of Arkansas in Fayetteville in January 2011.
“The new Walmart on Campus is going to be a wonderful amenity for the students of ASU,” said Tempe Chamber of Commerce president and chief executive officer Mary Ann Miller. “To be able to get off your elevator or get on your bike and be able to pick up a prescription or just basic necessities will add to the convenience of living on or next to campus.”
The format offers quick and convenient shopping, with health and wellness services, general convenience items and merchandise tailored to the campus, all at Walmart’s everyday-low prices.
The pharmacy offers a full range of products and services. Pharmacy team members can answer product and prescription questions and offer health and wellness solutions. The pharmacy serves most insurance plans and features $4 generics.
“With our smaller format and being located right on campus, our store is perfect for those who need to pick up a prescription or something for a quick meal,” said store manager Mario Espino. “Our customers will be able to find what they need quickly and easily and then head on back to class.”
Walmart’s debut of its first Neighborhood Market in New York state — in the Long Island suburb of Levittown — illustrates the competitive disruption that its smaller formats with pharmacies present to drug chains and other mass retailers.
Opened last month, the 49,000-square-foot Levittown store — situated in the space of a former Waldbaum’s supermarket, a chain of regional grocer A&P — features a full pharmacy department with its own signage on the front of the building. Surrounding the pharmacy area are aisles of over-the-counter medicines and other health and beauty aids, including a prominent cosmetics section.
Within two or three miles east and west along the main thoroughfare where the Levittown Neighborhood Market is located are a bevy of retail competitors, including a Target discount store (with a P-Fresh grocery department and a pharmacy), a BJ’s Wholesale Club, a Stop & Shop supermarket (with a pharmacy), a King Kullen supermarket (with a pharmacy), Dollar Tree, Ulta Beauty, two Rite Aid drug stores, and a CVS/pharmacy and a Walgreens drug store. Shortly after the Neighborhood Market’s opening, area residents received door tags urging them to transfer prescriptions to the store; that message was also carried on a sign-toting truck driving in the area.
Yet it’s not just Walmart’s smaller formats, discount stores and Supercenters that are turning up the heat on retail pharmacy operators. Sam’s Club has transformed and elevated pharmacy from a supporting role in its array of offerings to a central strategic position. Prescription drugs and other health and wellness segments now constitutes a core set of categories and services that attract both members and potential members.
Leading that transformation has been Jill Turner-Mitchael, senior vice president of health and wellness, along with her management team.
The impetus for Sam’s decision to move into the health and wellness space came from the input of members. The chain utilized focus groups, one-on-one interviews and shop-alongs to ask more than 9,000 members what they wanted from a warehouse club, and specifically what they wanted Sam’s Club to deliver as a health and wellness provider.
“What surprised us most was the members’ belief in the importance of pharmacy,” said Turner-Mitchael. “As a result, we have made pharmacy, and pharmacy-related health care services, our primary health and wellness focus. Along with our optical and hearing aid centers, pharmacy has become our focal point.”
Turner-Mitchael is a trained pharmacist herself, and her own experience behind the prescription counter has greatly influenced the focus within Sam’s. “We want a community-based, one-on-one, neighborhood pharmacy feel at Sam’s Club, and we try to hire pharmacists who want to provide that kind of care,” she said.
*Editor’s Note: Russell Redman contributed to this article.
